The real estate market crash has already happened

[Marcus Auerbach]

It just looks different. When you see home sales drop from 6.1 million to 4 million, what else would you call it other than a crash? We are basically at 2008 levels. If car sales in the US would drop by 25 to 30%, the news would be screaming that the US auto market has crashed. 

Post 2008 and GFC our public definition of housing market crash is tied to forclosures and huge price drops. People who look at housing supply data understand that price drops are not going to happen any time soon. 

But nevertheless the housing market already crashed in 2023, we just have a different label for it. We call it housing affordability. The implications for the economy are profound, estimates are that housing makes up for 18% of GDP. I am guessing about half of that is rent, but still a huge number. 

I don't think that will change any time soon. The 50y mortgage idea is going to be a total fail, even people who think now this is a great idea, will start looking at numbers before they actually sign on the line and decide that paying tripple and uptil they are 90 only to save $200 per month may not be the best idea. 

And new construction is not going scale that fast either, that will take a decade. The only way out would be sub 5%-ish mortgage rates and the financial markets (MBS) are not going to make that happen as long as global inflation outlooks are elevated.

So, I think we are pretty much stuck on the current path for years to come and I don't see much potential for change. Thoughts? 

[Theresa Harris]

This is regional.  Where I am house prices are still going up (slowly) and selling quickly.  Higher end homes might sit for a bit.